Brazil’s national development bank launched a 1 billion reais ($588 million) fund that will finance projects to reduce greenhouse gas emissions associated with agriculture, reports Reuters.
According to a statement on the bank’s web site, the “ABC” program (Programa para Redução da Emissão de Gases de Efeito Estufa na Agricultura) will provide low interest loans to farmers and cooperatives to recover degraded agricultural land, implement projects that integrate forests into cattle and crop production, establish and maintain forest plantations on abandoned agricultural lands, and restore legal forest reserves for permanent protection. BNDES will loan up to 1 million reais ($588,000) at 5.5 percent, the lowest rate charge by the bank, per year to individual farmers and cooperatives.
The bank says the program is part of the country’s effort to reduce carbon dioxide emissions, the majority of which result from deforestation. Under its climate change policy, Brazil has committed to cutting deforestation in the Amazon by 70 percent by 2020 from a 1996-2005 baseline. Overall, Brazil aims to reduce projected emissions by 38-39 percent by 2020.
The move comes as BNDES faces mounting criticism over its role in financing activities that drive deforestation, including agricultural expansion and large-scale infrastructure projects like dams and roads. Last month an inquiry by the Federal Audit Court said BNDES failed to abide by internal safeguards in its lending to the cattle industry.
But BNDES also administers the Amazon Fund, a pot of money that Brazil is using to fund conservation and sustainable development projects in the world’s largest rainforest. BNDES last year established more rigorous lending criteria for ranchers and farmers. It now requires meatpackers to have a traceability system to ensure cattle production does not result in deforestation in order to qualify for loans.
BNDES lent 137 billion reais ($69 billion) in 2009—more than the World Bank.